What is opportunity cost and trade-off?

Question

I know the definitions, but I don't understand them. Opportunity cost is the most highly valued opportunity or alternative forfeited when a choice is made. Trade-off is a situation in which more of one thing necessarily means less of something else. I need to understand these definitions for my economics class.

I want the answer in clear details.

Answer 1

'Opportunity cost' means that doing one thing cost you the opportunity to do something else. For example, you have a one week vacation at the time of your 17th birthday and limited funds. You can spend it with your friend in Hawaii or with your Dad in Tennessee. You go to Hawaii. The opportunity cost was not getting to go see your Dad in Tennessee for your 17th birthday.

You can never spend your same vacation that you spent in Hawaii again, so you can't also go to Tennessee for your 17th birthday. That's an opportunity cost -- the opportunity is gone forever and it's what you had to give up to do the Hawaii trip for your 17th birthday.

Trade-off is a related concept. So for example, you have $400 and 50 pairs of shoes. You like money and you like shoes. You go buy 2 new pairs of shoes. You now have $300 and 52 pairs of shoes. Trade-off.

Because the concepts are so related, listen carefully to how your teacher uses the terms and how the teacher wants you to differentiate between the two concepts.

Hope that helps.

Answer 2

Definition Of Tradeoff In Economics

Answer 3

Hey Bestie,
I am in your situation right now. I don't understand the defintions either. We should go ask the teacher on Monday.

Answer 4

Someday the world will be a better place when people learn.We are all worth the same amount.